Margrethe Vestager: The new age of corporate monopolies

Recorded atSeptember 20, 2017
Duration (min:sec)19:35
Video TypeTED Stage Talk
Words per minute137.23 very slow
Readability (FK)54.34 medium
SpeakerMargrethe Vestager
CountryKingdom of Denmark
Occupationpolitician, poet
DescriptionDanish politician

Official TED page for this talk


Margrethe Vestager wants to keep European markets competitive -- which is why, on behalf of the EU, she's fined Google $2.8 billion for breaching antitrust rules, asked Apple for $15.3 billion in back taxes and investigated a range of companies, from Gazprom to Fiat, for anti-competitive practices. In an important talk about the state of the global business, she explains why markets need clear rules -- and how even the most innovative companies can become a problem when they become too dominant. "Real and fair competition has a vital role to play in building the trust we need to get the best of our societies," Vestager says. "And that starts with enforcing our rules."

Text Highlight (experimental)
100:12 Let's go back to 1957.
200:18 Representatives from six European countries had come to Rome to sign the treaty that was to create the European Union.
300:29 Europe was destroyed.
400:32 A world war had emerged from Europe.
500:37 The human suffering was unbelievable and unprecedented.
600:43 Those men wanted to create a peaceful, democratic Europe, a Europe that works for its people.
700:55 And one of the many building blocks in that peace project was a common European market.
801:05 Already back then, they saw how markets, when left to themselves, can sort of slip into being just the private property of big businesses and cartels, meeting the needs of some businesses and not the needs of customers.
901:27 So from our very first day, in 1957, the European Union had rules to defend fair competition.
1001:39 And that means competition on the merits, that you compete on the quality of your products, the prices you can offer, the services, the innovation that you produce.
1101:52 That's competition on the merits.
1201:55 You have a fair chance of making it on such a market.
1301:59 And it's my job, as Commissioner for Competition, to make sure that companies who do business in Europe live by those rules.
1402:12 But let's take a step back.
1502:16 Why do we need rules on competition at all?
1602:20 Why not just let businesses compete?
1702:24 Isn't that also the best for us if they compete freely, since more competition drives more quality, lower prices, more innovation?
1802:39 Well, mostly it is.
1902:43 But the problem is that sometimes, for businesses, competition can be inconvenient, because competition means that the race is never over, the game is never won.
2003:02 No matter how well you were doing in the past, there's always someone who are out there wanting to take your place.
2103:12 So the temptation to avoid competition is powerful.
2203:18 It's rooted in motives as old as Adam and Eve: in greed for yet more money, in fear of losing your position in the market and all the benefits it brings.
2303:35 And when greed and fear are linked to power, you have a dangerous mix.
2403:44 We see that in political life.
2503:47 In part of the world, the mix of greed and fear means that those who get power become reluctant to give it back.
2604:00 One of the many things I like and admire in our democracies are the norms that make our leaders hand over power when voters tell them to.
2704:16 And competition rules can do a similar thing in the market, making sure that greed and fear doesn't overcome fairness.
2804:27 Because those rules mean that companies cannot misuse their power to undermine competition.
2904:36 Think for a moment about your car.
3004:40 It has thousands of parts, from the foam that makes the seats to the electrical wiring to the light bulbs.
3104:51 And for many of those parts, the world's carmakers, they are dependent on only a few suppliers.
3205:01 So it's hardly surprising that it is kind of tempting for those suppliers to come together and fix prices.
3305:11 But just imagine what that could do to the final price of your new car in the market.
3405:20 Except, it's not imaginary.
3505:24 The European Commission has dealt with already seven different car parts cartels, and we're still investigating some.
3605:36 Here, the Department of Justice are also looking into the market for car parts, and it has called it the biggest criminal investigation it has ever pursued.
3705:49 But without competition rules, there would be no investigation, and there would be nothing to stop this collusion from happening and the prices of your car to go up.
3806:03 Yet it's not only companies who can undermine fair competition.
3906:08 Governments can do it, too.
4006:11 And governments do that when they hand out subsidies to just the favorite few, the selected.
4106:21 They may do that when they hand out subsidies -- and, of course, all financed by taxpayers -- to companies.
4206:30 That may be in the form of special tax treatments, like the tax benefits that firms like Fiat, Starbucks and Apple got from some governments in Europe.
4306:46 Those subsidies stop companies from competing on equal terms.
4406:51 They can mean that the companies that succeed, well, they are the companies that got the most subsidy, the ones that are the best-connected, and not, as it should be, the companies that serve consumers the best.
4507:07 So there are times when we need to step in to make sure that competition works the way it should.
4607:15 By doing that, we help the market to work fairly, because competition gives consumers the power to demand a fair deal.
4707:25 It means that companies know that if they cannot offer good prices or the service that's expected, well, the customers will go somewhere else.
4807:38 And that sort of fairness is more important than we may sometimes realize.
4907:47 Very few people think about politics all the time.
5007:51 Some even skip it at election time.
5107:55 But we are all in the market.
5207:58 Every day, we are in the market.
5308:02 And we don't want businesses to agree on prices in the back office.
5408:07 We don't want them to divide the market between them.
5508:11 We don't want one big company just to shut out competitors from ever showing us what they can do.
5608:20 If that happens, well, obviously, we feel that someone has cheated us, that we are being ignored or taken for granted by the market.
5708:31 And that may undermine not only our trust in the market but also our trust in the society.
5808:39 In a recent survey, more than two-thirds of Europeans said that they had felt the effects of lack of competition: that the price for electricity was too high, that the price for the medicines they needed was too high, that they had no real choice if they wanted to travel by bus or by plane, or they got poor service from their internet provider.
5909:06 In short, they found that the market didn't treat them fairly.
6009:11 And that might seem like very small things, but they can give you this sense that the world isn't really fair.
6109:23 And they see the market, which was supposed to serve everyone, become more like the private property of a few powerful companies.
6209:35 The market is not the society.
6309:38 Our societies are, of course, much, much more than the market.
6409:43 But lack of trust in the market can rub off on society so we lose trust in our society as well.
6509:55 And it may be the most important thing we have, trust.
6610:01 We can trust each other if we are treated as equals.
6710:08 If we are all to have the same chances, well, we all have to follow the same fundamental rules.
6810:17 Of course, some people and some businesses are more successful than others, but we do not trust in a society if the prizes are handed out even before the contest begins.
6910:33 And this is where competition rules come in, because when we make sure that markets work fairly, then businesses compete on the merits, and that helps to build the trust that we need as citizens to feel comfortable and in control, and the trust that allows our society to work.
7010:58 Because without trust, everything becomes harder.
7111:02 Just to live our daily lives, we need to trust in strangers, to trust the banks who keep our money, the builders who build our home, the electrician who comes to fix the wiring, the doctor who treats us when we're ill, not to mention the other drivers on the road, and everyone knows that they are crazy.
7211:26 And yet, we have to trust them to do the right thing.
7311:32 And the thing is that the more our societies grow, the more important trust becomes and the harder it is to build.
7411:43 And that is a paradox of modern societies.
7511:48 And this is especially true when technology changes the way that we interact.
7611:55 Of course, to some degree, technology can help us to build trust in one another with ratings systems and other systems that enable the sharing economy.
7712:06 But technology also creates completely new challenges when they ask us not to trust in other people but to trust in algorithms and computers.
7812:19 Of course, we all see and share and appreciate all the good that new technology can do us.
7912:27 It's a lot of good.
8012:30 Autonomous cars can give people with disabilities new independence.
8112:35 It can save us all time, and it can make a much, much better use of resources.
8212:41 Algorithms that rely on crunching enormous amounts of data can enable our doctors to give us a much better treatment, and many other things.
8312:54 But no one is going to hand over their medical data or step into a car that's driven by an algorithm unless they trust the companies that they are dealing with.
8413:09 And that trust isn't always there.
8513:13 Today, for example, less than a quarter of Europeans trust online businesses to protect their personal information.
8613:24 But what if people knew that they could rely on technology companies to treat them fairly?
8713:34 What if they knew that those companies respond to competition by trying to do better, by trying to serve consumers better, not by using their power to shut out competitors, say, by pushing their services far, far down the list of search results and promoting themselves?
8813:59 What if they knew that compliance with the rules was built into the algorithms by design, that the algorithm had to go to competition rules school before they were ever allowed to work, that those algorithms were designed in a way that meant that they couldn't collude, that they couldn't form their own little cartel in the black box they're working in?
8914:29 Together with regulation, competition rules can do that.
9014:35 They can help us to make sure that new technology treats people fairly and that everyone can compete on a level playing field.
9114:46 And that can help us build the trust that we need for real innovation to flourish and for societies to develop for citizens.
9214:59 Because trust cannot be imposed.
9315:03 It has to be earned.
9415:06 Since the very first days of the European Union, 60 years ago, our competition rules have helped to build that trust.
9515:19 A lot of things have changed.
9615:22 It's hard to say what those six representatives would have made of a smartphone.
9715:29 But in today's world, as well as in their world, competition makes the market work for everyone.
9815:38 And that is why I am convinced that real and fair competition has a vital role to play in building the trust we need to get the best of our societies, and that starts with enforcing our rules, actually just to make the market work for everyone.
9916:00 Thank you.
10016:02 (Applause) Bruno Giussani: Thank you.
10116:11 Thank you, Commissioner.
10216:12 Margrethe Vestager: It was a pleasure.
10316:14 BG: I want to ask you two questions.
10416:16 The first one is about data, because I have the impression that technology and data are changing the way competition takes place and the way competition regulation is designed and enforced.
10516:27 Can you maybe comment on that?
10616:28 MV: Well, yes, it is definitely challenging us, because we both have to sharpen our tools but also to develop new tools.
10716:38 When we were going through the Google responses to our statement of objection, we were going through 5.2 terabytes of data.
10816:49 It's quite a lot.
10916:51 So we had to set up new systems.
11016:54 We had to figure out how to do this, because you cannot work the way you did just a few years ago.
11117:01 So we are definitely sharpening up our working methods.
11217:05 The other thing is that we try to distinguish between different kinds of data, because some data is extremely valuable and they will form, like, a barrier to entry in a market.
11317:15 Other things you can just -- it loses its value tomorrow.
11417:20 So we try to make sure that we never, ever underestimate the fact that data works as a currency in the market and as an asset that can be a real barrier for competition.
11517:35 BG: Google. You fined them 2.8 billion euros a few months ago.
11617:40 MV: No, that was dollars. It's not so strong these days.
11717:42 BG: Ah, well, depends on the -- (Laughter)
11817:45 Google appealed the case. The case is going to court.
11917:47 It will last a while.
12017:50 Earlier, last year, you asked Apple to pay 13 billion in back taxes, and you have also investigated other companies, including European and Russian companies, not only American companies, by far.
12118:02 Yet the investigations against the American companies are the ones that have attracted the most attention and they have also attracted some accusations.
12218:12 You have been accused, essentially, of protectionism, of jealousy, or using legislation to hit back at American companies that have conquered European markets.
12318:20 "The Economist" just this week on the front page writes, "Vestager Versus The Valley."
12418:25 How do you react to that?
12518:28 MV: Well, first of all, I take it very seriously, because bias has no room in law enforcement.
12618:38 We have to prove our cases with the evidence and the facts and the jurisprudence in order also to present it to the courts.
12718:46 The second thing is that Europe is open for business, but not for tax evasion.
12818:52 (Applause)
12918:58 The thing is that we are changing, and for instance, when I ask my daughters -- they use Google as well -- "Why do you do that?"
13019:07 They say, "Well, because it works. It's a very good product."
13119:10 They would never, ever, come up with the answer, "It's because it's a US product."
13219:15 It's just because it works.
13319:17 And that is of course how it should be.
13419:19 But just the same, it is important that someone is looking after to say, "Well, we congratulate you while you grow and grow and grow, but congratulation stops if we find that you're misusing your position to harm competitors so that they cannot serve consumers."
13519:38 BG: It will be a fascinating case to follow.
13619:40 Thank you for coming to TED.
13719:41 MV: It was a pleasure. Thanks a lot.
13819:43 (Applause)